EU conditional nod for Merck's $17-bn purchase of Sigma-Aldrich

The European regulator yesterday approved German drugmaker Merck KGaA's $17 billion purchase of Sigma-Aldrich Corp after the US company pledged to sell its assets in Germany.

Merck, 70 per cent controlled by the descendants of its 17th century founder, had in September last struck a deal to buy Sigma-Aldrich for $17 billion in cash in order to boost its lab supplies business, the biggest takeover in the German group's history.

Last month Merck said the European Commission (EC) expressed concerns "of a limited nature" and later offered concessions to get the deal approved.

"The decision is conditional on the divestment of certain Sigma-Aldrich assets, including manufacturing assets in Germany, the rights to certain brands and a sales force," the EC said in a statement.

"The Commission had concerns that the merged entity would have faced insufficient competitive pressure from the remaining players in the markets for certain laboratory chemicals, with a risk of price rises. The commitments offered by the companies address these concerns."

As part of the EU commitments, Merck and Sigma-Aldrich have agreed to sell parts of Sigma-Aldrich's solvents and inorganics business in Europe. These include its manufacturing assets in Seelze, Germany, where most of the solvents and inorganics sold by Sigma-Aldrich in Europe are manufactured.

In addition, the divestiture of solvents and inorganics sold by Sigma-Aldrich worldwide under the Fluka, Riedel-de-Haen and Hydranal brands as well as a temporary licence to the Sigma-Aldrich brand for the supply of solvents and inorganics in the European Economic Area have been agreed. The commitments also include the transfer of customer information and a solution to ensure a temporary channel to the market.

Sigma-Aldrich is a life science and technology company focused on enhancing human health and safety and manufactures and distributes more than 230,000 chemicals, biochemicals and other essential products to more than 1.4 million customers globally in research and applied labs as well as in industrial and commercial markets.

It operates in 37 countries and has manufacturing and distribution facilities in the US, Australia, Brazil, Canada, Germany, India, Ireland, Israel, Japan, Singapore, Switzerland, Taiwan and the UK.

The company reported annual sales of $2.7 billion last year.